US telco mergers to boost RP call centers

The flurry of mergers and acquisitions in the US telecommunications industry, including the combination of AT&T and BellSouth Corp. announced last Monday, would give the Philippine business process outsourcing (BPO) industry a big boost in the months and years ahead, Catanduanes Rep. Joseph Santiago (NPC) said.

"We definitely expect the ongoing consolidation of US telecom service providers to translate to more customer care, possibly even technical support, call-center jobs being offshored by the surviving entities to the Philippines," said Santiago, former chief of the National Telecommunications Commission.

"Large business combinations create redundant back-office support functions and allow the new corporations greater flexibility to outsource thousands of non-core, information technology-enabled service jobs," added Santiago, vice chairman of the House transportation and communications committee.

"In fact, many US telecoms companies, and their chief rivals, the cable TV operators, have been outsourcing some of their customer management operations to Philippine call centers since 2000," he said.

AT&T said it sees over $3 billion in annual cost-savings from the deal with BellSouth, and plans to cut 10,000 jobs. The layoffs are on top of the 20,000 job cuts from AT&T’s November 2005 merger with SBC Communications Inc. and from operational initiatives.

Santiago said AT&T’s reduced headcount would mean more business for, and incremental jobs in, Philippine call centers and back-office solutions providers.

AT&T and BellSouth are two of the four integrated telecom service providers in the US; the other two being Verizon Communications Inc. and Qwest Communications International Inc.

AT&T’s planned $66.16-million takeover of BellSouth would produce the largest integrated telecom service provider in the US, overtaking Verizon.

AT&T is the second largest US local telephone service provider, with 49.4 million lines as of December 2005, a long-distance penetration rate of 63 percent and a DSL penetration rate of 25 percent of its consumer lines.

The company also controls 60 percent of Cingular Wireless, the largest wireless provider in the US, with 54 million subscribers.

BellSouth is the third largest US local telephone service provider, with 20 million lines, a long-distance penetration rate of 58 percent, and 2.9 million DSL customers as of December 2005. The company also owns 40 percent of Cingular Wireless.

The booming Philippine BPO industry, driven mainly by call centers, is projected to produce $3.63 billion in revenues this year, up 50 percent from the $2.42 billion posted in 2005.

The industry sees investments hitting P15.4 billion this year, 40 percent higher than the P11 billion registered in 2005, according to the Business Processing Association of the Philippines.